OTTAWA — No sooner had the Conservative government issued its decision blocking Telus from taking over Mobilicity than the Conservative Party was raising funds off it. “Our Conservative government is taking action to reduce your cell phone bill,” ran the pitch, in emails that went out to party supporters that same day. “We will not allow the big telecommunications companies to shut down competition.”

That’s nice. But the competition the government wants to protect is not competition as you or I understand it, where all the players are free to buy and sell in open markets and may the best firm win. Rather, it’s a carefully circumscribed, artificially sustained affair, a kind of hothouse competition in which the weaker firms are kept in the game by government action, a simulacrum designed to preserve the illusion of competition in place of the real thing. That may be good for the industry, but it’s not clear it’s good for consumers.

The asset Telus hoped to acquire in the Mobilicity deal was its share of the Advanced Wireless Services spectrum used by some smartphones. But Mobilicity only came into possession of this commodity because of a 2008 federal policy that set aside a portion of the spectrum for new firms, with a proviso that it could not be transferred until next year. The company the feds now boast of preserving by policy was a creation of federal policy in the first place. But it was never particularly viable, and has never posed much of a competitive threat to the industry’s big three, Bell, Rogers and Telus. The best it can now look forward to is to be taken over by Wind Mobile, another relatively minor player that has struggled to find a place in the market.

That the government’s model of competition is proving less than robust was signalled by another regulatory edict this week, the CRTC’s “wireless code of conduct,” which decreed, inter alia, that cellphone companies may no longer hold consumers to three-year contracts. Whether this is a boon or a bane to consumers may be debated — the most direct impact is to ensure such contracts will never be offered — but what’s clear is that in a truly competitive market such intervention would be unnecessary: firms would offer three-year contracts, or not, in obedience not to the demands of the regulator, but the tastes of consumers.

But then, wireless is not the only part of the telecom sector where this sort of highly directed competition is the rule. Across the television and Internet universe, also dominated by Rogers, Bell and Telus, along with Shaw Cable in the West and a handful of other players, the CRTC is engaged in the same kind of complex jiggery-pokery. As with wireless, this is sometimes subject to cabinet over-ride, adding a second layer of unpredictability.

The issue here is that the major carriers, the people who own the “pipes,” are also involved in producing the content that travels along them — in competition, as it were, with their customers, the television networks and smaller Internet service providers that pay to use them. The carriers’ obvious conflict of interest in this regard is a constant source of controversy.

The flare-up over usage-based billing, for example, was in part based on the suspicion that the caps were aimed at limiting the retail ISPs’ share of the market. So, too, the recent CRTC hearings on “mandatory carriage” heard accusations that the carriers were favouring their own offerings over those of the applicants. The industry is consumed with this, an endless game of point-the-finger, again aimed at persuading the regulators, rather than consumers.

Responses to this unsatisfactory state of affairs have tended to fall into two camps: either “regulate more, since competition isn’t working,” or, less often, “competition is working, more regulation would only make things worse.” I find myself drawn to a third position. It would be hard to say competition in telecoms, in its present form, is working as well as it might. But there’s a better remedy than regulation. In place of the government’s stage-managed competition, why not try the real thing for a change?

What would it take to bring real competition to the industry? Two things. The first is to eliminate the remaining barriers to foreign ownership in telecoms. The hothouse model was premised on the argument that sufficient new competition could be generated from within. With that argument in tatters, it’s time to look further afield. Opening the borders wouldn’t necessarily mean a sudden influx of new carriers: even in countries without such restrictions, a handful of firms tend to dominate. But it would make the market, as economists say, “contestable.” Just the threat of a foreign invasion should be enough to keep the domestic players from getting too greedy.

The second is to break up the big telecom empires: to separate carriage from content, or the monopolistic from the competitive elements. Large infrastructure networks, like railways or telephone lines, tend naturally to monopoly. Not so the services that use them. Force the carriers to divest their content holdings, or spin their networks off into separate operations, and we need no longer worry whether the cable or phone companies were favouring their own content over other providers. Competition would flourish, without need of regulatory wetnurses.

We’ve tried the government’s way. It hasn’t worked. Protecting consumers from the ill effects of fake competition may give the Conservatives an issue to raise funds with. But personally, I’d rather have real competition.

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